Wednesday, September 14, 2005

People are pitching in to respond to Katrina from each according to their abilities.
From each as they choose, to each as they are chosen.
Volokh conspiracy is asking for $1000 donations, and getting them.
Wil Wheaton is playing poker at PokerStars, and raising money, by rigging the odds, and it's working. Websnark and other cartoonists are making cartoons.
My thing is that I can rant.

There are three paradigms for filling demand, here, demand for good and services that come up when your city gets washed away.
One is primitive communism, where people just help each other.
Advantages - it works, and the donors feel better.
Disadvantages - tends to work based on sensationalism, and can miss the day to day boring catastrophes. Fosters dependency and helplessness, or worse, a sense of entitlement to live off the efforts of those who have more, because they work for it.
Wildly inefficient (sp?) but kinda fun.
National Socialism - The King, or government, taxes everybody, say to the tune of 100 billion, and uses some to provide relief, while other funds are use to take guns away from homewowners, and "voluntarily" drag people from their houses.
Disadvantages - the few pennies that go to relief are propaganda for a war machine.
BTW in using the term national socialism i'm not talking about nazis (although hitler rose to power by raising funds for milk for hungry german children.) Nation = usa,
socialism = government spending.
Coercive taxation ruins lives, and at best is like having a tapeworm. Taxes provide a strong disincentive to productive work - the more you make, the more they take.
Fosters dependency and helplessness among those who get relief. Inefficient - more goes to the salaries of the relief workers than to the so called needy. Funds tend to get hijacked for other purposes, such as war and building prisons and highways to nowhere.
Free enterprise -
People manage risk by buying insurance. This is a form of gambling - I'm gonna bet that I'll get sick, die, crash my car, or my house will burn and my stuff get stolen.
People obtain credit from banks to finance unexpected expenses like starting over in a new city.
Disadvantages include that the insurance company has little incentive to actually pay out when the time comes, just to preserve an image of looking like they would pay out. I had a car wreck 4/15/02 and finally this year got my $400 check after I had to sue my insurance company. But auto insurance isn't really insurance, it's a government-compelled protection racket, so this isn't a good example.
This system isn't perfect, and it may be that a little primitive communism helps keep the wheels of free enterprize moving. But that's part of the system too. In a free society, productive people are free to blow their earnings donating to charities.
So based on this third model, how can you help Katrina "victims"?
Buy more insurance, and save money in a bank. The insurance company will take your money and use it to pay out the Katrina victims who bought insurance. The bank will take your money, make loans to people to build new houses, buy new cars and so forth. Oh, and then when it's your turn (earthquake, asteroid strike, wild pig attack) you'll have insurance and money in the bank.
What else can you do? Instead of donating, consider selling stuff to the Katrina victims, like food or housing or that old car. And if they don't have cash, make a loan. Sure, it'll probably never be paid back, there's some risk. But I'm only talking about what you were willing to donate anyway - so it's really risk free.
Speaking of risk, one of the advantages of the market approach is that it is very efficient at managing risk, which charity and government are not.
For example, don't build your houses under sea level! Or if you do, think of that structure as very temporary, and have a backup plan. The Japanese have a culture based on living around earthquakes and tsunamis. They live in tiny shacks made from sticks and paper, and expect to rebuild them often. And they save like crazy. This culture made them able to deal with nuclear devastation and shug it off and rebuild.
That's the kind of can-do spirit that gets squashed in New Orleans public housing projects. Yes, I'm part of that plague of locusts that only goes to New Orleans during mardi gras. Been three times. Hitchhiked, flew, drove. I guess that was the last time I flew, pre 9-11, back when I used to have money. Ok, enough rant. I just wanted to do my part. Don't donate. Invest. Better for them, better for you. Don't pay any taxes you can avoid through careful financial planning. Invest. Better for them, better for you.
Ok, a bit more. "We should donate to those poor helpless Katrina victims because after all they were stuck in New Orleans and didn't have any way out." Bull. Granted, this rant brings up some class privilege issues, but I'll stick with it. I was 22, just me and my girlfriend and the clothes on our backs. We put our thumbs out, and in 72 hours were back in Colorado. Sure, we had our backpacks stolen in Missouri and caught a snowstorm in Kansas, but we made a choice not to stay in New Orleans. It's a choice anyone can make. It does help to be 22 - I no longer have that kind of sense of adventure. But the whole charity and taxation game is about subsiding bad choices, which in the end isn't doing anybody any favors.

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